Home / Shipping News / International Shipping News / MISC likely to post flattish Q4 earnings due to construction, interest cost for Mero-3 FPSO

MISC likely to post flattish Q4 earnings due to construction, interest cost for Mero-3 FPSO

The incurrence of construction and interest costs for the Mero-3 floating production storage and offloading (FPSO) vessel could result in MISC Bhd posting a flat financial performance in the fourth quarter (Q4).

Hong Leong Investment Bank Bhd (HLIB Research) analyst Jeremie Yap said the incurrence would be mitigated by improving liquified natural gas (LNG) spot rates in the winter season.

“Fluctuation in tanker rates are still the largest risk factors for MISC in our view. However, we expect 2022 to be a better year for its petroleum tanker division as oil demand and trade recovers,” he said in a research report today.

The Mero-3 FPSO is located offshore Rio de Janeiro in the Libra block, Santos Basin, Brazil.

HLIB Research has maintained a ‘Buy’ call with a relatively unchanged target price of RM7.67 after accounting for in-house changes to 66.5 per cent owned Malaysia Marine and Heavy Engineering (MMHE).

“We like MISC because of its defensive nature, as well as the fact that it offers a relatively stable dividend yield of 4.5 per cent,” Yap said, adding that this is due to MISC’s portfolio of long-term charters, which can generate long-term cash flows, as well as the fact that the company has a relatively stable dividend payout policy of 33 sen per year.

However, HLIB Research has cut MISC’s net profit forecast for the financial year ending December 31, 2021 (FY21) by 11 per cent due to lower spot charter rates for the year while leaving FY22-FY23 estimates unchanged.

MISC’s net profit surged 55.25 per cent in the third quarter (Q3) ended September 30, 2021, to RM401.00 million from RM258.30 million recorded a year ago.

In an exchange filing yesterday, the energy-related maritime solutions and services provider said this was on the back of higher contribution from liquified natural gas (LNG) asset solutions, offshore business and marine and heavy engineering segments.

Its Q3 revenue jumped 31.1 per cent to RM2.70 billion from RM2.06 billion due to higher revenue recognition from the conversion of FPSO in the offshore business segment and higher income in the marine and heavy engineering segment during the period.

For the first nine-month period, MISC returned to the black with a net profit of RM1.37 billion, reversing its net loss of RM599 million, while revenue grew 12.3 per cent to RM7.59 billion from RM6.76 billion.

Meanwhile, MISC has declared a third tax-exempt dividend of seven sen per share, payable on December 14, 2021.
Source: New Straits Times

Recent Videos

Hellenic Shipping News Worldwide Online Daily Newspaper on Hellenic and International Shipping